08 February 2013

Tax Reform Cometh! Ignore at Your Peril

From the looks of the nightly news and the front pages of the major newspapers, all activity in Washington is centered on what to do about immigration and guns. While tax reform appears to have fallen off the national radar screen, many conversations about scrubbing the tax code are going on off-camera. Those who assume nothing will happen this year on tax reform, do so at their own risk.

Let’s start with the House. House Ways and Means Chairman Camp is proceeding apace with tax reform. He released an international tax draft last year and a draft deal with the financial service sector late last month. And just this week, we learned that he is setting a process in motion that could produce at least a draft tax reform bill sometime around April 15 (tax day). In the Senate, Finance Committee Chairman Baucus (D-MT) is meeting with his committee members of both parties to see if he can’t shepherd a bipartisan tax reform bill through his committee even while facing a potentially tough reelection in 2014.

The sticking point remains what (if anything) to do about raising more revenue in the context of tax reform? How will that be balanced with cuts? Both the President and Majority Leader Reid (D-NV) have expressed interest in “closing loopholes” (which means raising taxes on somebody) as part of upcoming potential budget deals and beyond. Republicans are not enthusiastic. As an easy target for revenue, our sector should remain vigilant and ensure our voices are heard before it could be too late.